Best Judgment Assessment Order withdrawn as Petitioner filed relevant returns in accordance with order of High Court

Associate Decor Ltd. challenged best judgment assessment orders issued by the Assistant Commissioner of Commercial Taxes. The High Court had previously ordered the attachment of the company's accounts to be lifted if returns were filed. Although the company filed its returns, the assessment orders remained valid. The High Court extended the deadline for filing returns and ruled that the filed returns, made in accordance with the court's order, meant the best judgment assessment orders were withdrawn.

In Associate Decor Ltd. v. Assistant Commissioner of Commercial Taxes, Bengaluru [Writ Petition No. 45290 of 2019 (T-RES) dated July 02, 2021] Associate Decor Ltd. (“the Petitioner”) has filed the current petition challenging the endorsement No. ACCT LGSTO-150/T.No.51/19-20 dated April 25, 2019 (“impugned endorsement”) which was issued by Assistant Commissioner of Commercial Taxes (“the Respondent”). Along with that, the Petitioner has also sought for a direction that the Respondent to withdraw all the best judgment assessment orders passed during the period of September 2017 to December 2018.

The Competent Authority had passed best judgment assessment orders under Section 62(1) of the Karnataka Goods and Services Tax Act, 2017 (“KGST Act”) by raising tax demand on the Petitioner, pursuant to which, current accounts of the Petitioner were attached accordingly. The Hon'ble Karnataka High Court, on a writ petition W.P.No.40360-40364/2018 being filed by the Petitioner ordered the lifting of attachment of current account noting that if the Petitioner was to file its returns in respect of goods, the attachment would be released in favour of him.

Thereafter, the Respondent issued the impugned endorsement dated April 25, 2019 observing that though the attachment and garnishee notices were withdrawn, the best judgment assessment order still stood valid. The Petitioner has thereby come to the Court aggrieved by the same.

The Hon'ble Karnataka High Court observed that time to file the return was granted to the Petitioner, but this Hon'ble Court vide its order dated February 13, 2019 extended the time within which returns were to be filed. Though, according to Section 62(2) of the KGST Act, a period of 30 days is provided for filing of returns, however, the same was extended by the court vide its February 13, 2019 order.

Further noted, that the return filed by the Petitioner was in terms of Section 62(2) of the KGST Act and it is for this reason, the best judgment assessment orders which were passed under Section 62(1) of the KGST Act would stand withdrawn. The impugned endorsement is therefore set aside and the return filed by the Petitioner under Section 62(2) of the KGST Act is directed to proceed in accordance with law.